AUDIT ANALYTICS AUDIT

ESSAY 1: CONTINUOUS AUDITING—A NEW VIEW
Pioneers such as Amazon have built cloud-based "ecosystems"
that make content such as its electronic books widely available.
Even though the firm has its own e-reader, the Kindle, and has
hatched a tablet computer too, it has also created apps and other
software that let people get at their digital stuff on all sorts of
devices, including PCs.
Other companies are developing their own ecosystems in a bid to
make people’s mobile-computing experience even more seamless.
Google’s recent $12.5 billion acquisition of Motorola Mobility,
which makes smartphones, tablets, and other gadgets, will enable
it to produce a new crop of devices to show off its cloud services,
such as Gmail and Google Docs, to best effect. Apple is stepping
up its integration efforts, rolling out an "iCloud" in which people
can store up to 5GB of content for nothing, and more if they pay.
(Economist, Nov. 4, 2010)
Figure 1-9 represents a potential schemata for an audit ecosystem with a
set of elements aimed at dealing with the emerging 21st century
information technology environment (21CITA) (Kozlovski and
Vasarhelyi, 2014).
Its main elements include the following:
Examination of transactions and account levels at their entry point
in the system, typically with process evaluation apps looking for a
variety of generic problems with transactions such as incomplete
or incoherent data, high loadings in potential fault discriminant
functions, data out of the normal transaction stream, and so on.
Examination of transactions / account levels using time-series,
cross-sectional, and time-series cross-sectional analyses to detect
aberrant transactions on a comparative and historical trend basis.
Constant monitoring of the environment through soft bridges with
social media, news pieces, competitor monitoring, and so on.
Development and monitoring of mixed loading factor equations
for exception detection.
Large audit databases aimed at validation of daily feeds and
collection of account-level data for cross-sectional analytics.
Audit plans that are sensitive to risk levels and variations. The
audit plan in a real time audit environment has to be adaptive
contingent on changing conditions and rely on continuous
monitoring of transactions (and adjustments) entering the system
as well as monitoring the time series and cross-sectional trends.
Hundreds or thousands of apps available in the environment
respond by creating tests with the dynamic adaptation of
assertions.
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